Posted on 08/13/2009 7:01:42 PM PDT by mbarker12474
... The crux of the matter is that the United States is no longer in control of its fate. Meetings with creditor nation leaders result in new orders given, and new policy directives enacted. Comparisons are made to China, but they too are a distraction. China can embark on its ... The USGovt creditors are in control. The August Hat Trick Letter reports have identified five major factors pointing to a severely stressful period of time at the end of August and into September.... The risk of accidents is rising exponentially from incredible backroom movement of massive funds to avert disasters on a weekly bas.... My best sources of information report that some unexpected deep shocks are coming from USGovt creditor nations. They are simply fed up, frustrated, and astonished at the manner of lost control, spiraling debts, and blatant monetization amidst lies in denial of that same monetization. The USTreasury auctions now have domestic hidden elements, and global hidden monetization elements...... The creditors regard the US political and banking leaders as living in a world divorced from reality, and thus require shock treatment. USTreasury Bonds have become a liquidation currency. Actions in the Persian Gulf and European region indicate that USTBonds are being used in liquidation and distressed sales on a truly massive scale. The failed Dubai construction projects .... For China it is a race against the clock for how fast they can convert their $2 trillion in USDollar holdings into strategic assets, namely oil and gold. At today’s deflated prices, putting together a really good billion dollar deal is a difficult thing to do. Putting together 2000 of them is impossible. Doing it before the dollar collapses? Not a Chinaman’s chance. And they know it.” .... long article with charts...
(Excerpt) Read more at financialsense.com ...
History’s greatest mass murderer, Mao Zedong, said that “power grows out of the barrel of a gun”.
But he was wrong. There is a force greater than violence, and that force is the true source of human power. The force is love — the love of a leader. God gives some men the power to compel this love in others. This power is charisma, and it, not mere brute force, is the true source of power.
Consider a collapse of social order. At first, it’s a war of all against all, of every man for himself. But soon enough, gangs form, each one centered upon a leader. What compels the members of a gang to obey that leader? Any one of them could theoretically kill him and take his place. Collectively, the gang could overpower him. Yet they don’t in most cases — and when they do, the only real result is that some other gangster takes his place. “Meet the new boss, same as the old boss.”
The reason gangsters obey their leader is love — a personal dedication to him. And that kind of love can only be inspired by the force of charisma. A person with charisma can order men to die, and they will do so happily. We call such men “born leaders”. When gangs become larger, we call them “chieftains”; still larger, “dukes” (which just means “leader” in Latin); and, when the gang becomes a nation, we call them “princes” and “kings”. Ultimately, a man with sufficient charisma can control the known world, commanding the personal loyalty of its inhabitants. Such men are known simply as “he who commands” — in Latin, “imperator”. Thus are emperors made; thus are empires created.
Charisma is the only real “superpower” that exists. It is far more powerful than any gun. For the love of a leader, a man will gladly face any numbe of guns, reducing the power of the gun (and its wielder) to zero. But, like any form of power, charisma can be used for good or for evil. Our task at present is to survive the efforts of the charisma-haunted minions of the current Leader and his evil puppet-masters until a charismatic Champion arises — a leader who will rally the forces of good to battle evil and save the world for another season.
May the Emperor come soon!
He who controls the debt ends up holding the empty bag when the music stops
The Chicoms aren’t too worried. They will simply nationalize all the plants built by US money.
“Our government wouldn’t mind hyper inflation, either, for the same reason.”
I believe THAT is the reason that the Rats don’t care how much debt they accrue. I fear by the end of this, our savings will be worthless. Hard assets are the only thing that will be worth anything.
The Japanese were probably in an even stronger credit position in the 1980s. The same dire predictions were written. Look where japan is now.
China has already destroyed itself with it’s one child policy. Their aging population dooms it’s future.
Jim Willie has been preaching hyperinflationary dollar collapse for the past 10 years.
Sure - except the banks are smarter this time - they'll get Obama to raise your mortgage payments - high enough so we're all a nation of renters. Goldman Sachs will own it all... well, all that's not owned by the Chinese...
>>Could someone with billions of dollars of personal wealth exert enough influence on the dollar to drive it down after buying positions in the international marketplace betting on the dollar to go down?
Not enough to make a difference. $4T of currency is traded every day.
““deep shocks are coming”
maybe O’s college aid apps and passport records will become known....
That soon?
Silver bullion may be the best, surest investment over the next 10 years I can imagine.
Yup, I remember. It was $3,000.00 for every New Zealander.
” I have to wonder if some of these people who have gold are wanting to dump it and buy stuff.”
At some point, that is exactly what should be done. Same as saving cash when the dollar is strong. Gold/silver are stores of value against falling currencies, which increase in purchasing power in such periods. Therefore, those who have gold/silver to exchange for devalued currencies indeed will be able to buy “more stuff” when they are in need.
“The Chicoms aren’t too worried. They will simply nationalize all the plants built by US money.”
Yes, and we could default on our debt too...right after we nationalize foreign holdings in the USA.
.....but, it would get real nasty rapidly after either action.
I think they've loosened the one child policy for Shanghai.
Shanghai To Relax One-Child Policy As China Faces Aging Population, Shrinking Work Force
” I fear by the end of this, our savings will be worthless. Hard assets are the only thing that will be worth anything.”
That indeed is the risk, and the reason all should have some precious metals and other hard assets in their overall wealth preservation plan.
Beans, bullets & booze.
“>>Could someone with billions of dollars of personal wealth exert enough influence on the dollar to drive it down after buying positions in the international marketplace betting on the dollar to go down?”
I would ask George Soros and the Bank of England. That could give some insight to your question. It has been attempted.
Soros has openly admitted he is shorting the dollar heavily.
Not a problem.
Donkey carts don't require oil, foreign or domestic.
China's loan growth plunged in July while exports fell 23pc from a year ago after grinding lower for nine months as consumers in the West tighten their belts further.
By Ambrose Evans-Pritchard
Published: 7:17PM BST 11 Aug 2009
Can the world rely on China's growth miracle to power recovery?
The data raise fresh doubts about the strength of global trade and whether the world can rely on China's growth miracle to power recovery.
Separately, the Baltic Dry Index – measuring freight rates for bulk goods – has tipped over, dropping 25pc since late July. The shipping figures buttress reports that China has stopped building up stocks of metals and other commodities after a spate of frantic buying over the early summer.
China's central bank said loan growth fell to $52bn (£31bn) from $248bn a month earlier, although it is too early to tell whether Beijing has begun to rein in credit after the explosion of bank loans in the first half of the year.
The loan figures are being watched closely by analysts and traders in the City. Excess liquidity in China has been a key driver of global markets since the rally began in March.
Beijing is walking a tightrope by trying to offset the collapse in exports – almost 40pc of GDP – with an investment blitz in roads, railways, and industry through state-owned companies.
The real economy cannot absorb the money, so it is leaking into asset speculation. The central bank estimates that 20pc of fresh credit has ended up in equity markets. The Shanghai index is up 80pc this year, though profits have fallen by almost a third. The pattern echoes the final phase of Japan's Nikkei bubble in 1989.
"China is a big fat tail risk for world markets," said Hans Redeker, currency chief at BNP Paribas. "Shanghai equities have reached the same extreme as in late 2007. The country will have to cut credit growth, and when this happens, Shanghai equities and commodities will suffer. That is what could bring this global rally to a halt."
China Construction Bank, the number two lender, is cutting loans by 70pc over the second half of the year. "We noticed that some loans didn't go into the real economy. Housing prices are rising too fast," said the bank's president, Zhang Jianguo.
Andy Xie, a leading consultant, said China's boom was a "giant Ponzi scheme" that was likely to "bring very bad consequences" for the country.
"The stock market is in a final frenzy again. The most ignorant retail investors are being sucked in by rising momentum," he said. Equities are overvalued by 50pc to 100pc.
Mr Xie, who wrote his doctoral thesis on Japan's bubble in the 1980s, said China's ratio of property prices to incomes is seven times higher than in the US. It costs three months' salary per square meter of space – arguably the highest in the world – though tower blocks are sitting empty. Prices are being propped up by state enterprises, abetted by local Communist bosses.
Mr Xie said Chinese booms and busts follow a political rythmn. There is a deeply-rooted belief that the authorities can keep the game going – the "Panda put", China's answer to the "Greenspan Put" – and that the Communist Party will not let the rally fizzle before the 60th anniversary of the revolution on October 1. This belief is self-fulfilling, for a while.
Mr Xie expects China's rally to falter around October, followed by fresh shots of liquidity before the economy falls into a deeper slump by 2012. "Property prices could drop like Japan's in the last two decades, which would destroy the banking system," he said.
Mr Xie said China's asset boom is the flip-side of the weak US dollar. US monetary stimulus is in effect leaking across the Pacific. Bust will follow when the dollar rallies, draining liquidity again. If the Fed tightens abruptly as it did under Paul Volcker in the early 1980s, the denouement could be painful for China.
Beijing deserves praise for trying to switch reliance from exports towards the domestic economy. It has had some success. Retail sales have risen 15pc over the last year. But Professor Michael Pettis from Beijing University said it is proving very hard to induce the Chinese to alter their spending habits. The cultural barriers will take years to overcome.
Instead, the stimulus is feeding more industrial investment, leading to more excess capacity worldwide. While Chinese GDP continues to grow near 8pc, this is based on output. In the West, GDP growth is based on spending. These two definitions are chalk and cheese.
The underlying story has not changed. The East-West imbalances that lay behind the Great Recession of 2008-2009 are getting worse, not better.
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It looks like the Baltic Dry Index is flopping into a 'W'.
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